Accounting.

Anonymous
timer Asked: May 2nd, 2017

Question description

Please answer in excel. 7 questions. I've already answered the first question.

1.


A. ABC Corp. just paid a dividend of $1.95 and the dividends are expected to indefinitely grow at a constant rate of 4.1% p.a. If investors require a return of 10.2% p.a. on this stock, what is the current value? Value in there years? In 15 years? CV=33.28 , Value in 3 years=37.54, Value in 15 years=60.80


Current Value 1.95*(1+4.1%)/(10.2%-4.1%)


Value in 3 years 1.95*(1+4.1%)^4/(10.2%-4.1%)


Value in 15 years 1.95*(1=4.1%)^16/(10.2%-4.1%)


B. XYZ Corp's next dividend will be $2.30 per share, and the constant dividend growth rate is 4.5% forever. If the current stock price is $39.85, what is the rate of return that investors require? What is the dividend yield? Expected capital gains yield? Required rate of return=10.27%, Dividend Yield=5.77%


Required return rate 2.30/39.85=4.5%


Dividend Yield 2.30/39.85



2. If a constant dividend growth rate is 4.9%, and a dividend yield is 5.7% for a company, what is the required rate of return on this company stock?


3. FD Corp. pays a constant $12 dividends on tis stock for the next 9 years, then will cease paying dividends forever. If investors require 10% return on this stock, what is the current value of the stock?


4. CCC Corp's preferred stock pays a $3.80 dividend every year, in perpetuity. If the issue currently sells for $78.45, what is the required return?


5. The stock price of QRS Inc. is $68. Investors require 11% return on similar stocks and QRS Inc. plans to pay a dividend of $3.85 next year. What growth rate is expected for the stock?


6. A. EEE Corp. has a new issue of preferred stock it calls 20/20 preferred. The stock will pay $20 dividends but the first dividend will not be paid until 20 years from today. if you require a return of 8% on this stock, how much would you pay today?


B. MBI Corp. will not pay any dividends over the next nine years. It will pay a dividend of $15 per share 10 years from today and increase the dividend by 5 percent per year thereafter. If investors require 14% return on similar stocks, what is the current stock value?


7. A. A company is expected to pay $3, $10, $15 and $3.05 dividends over the next four years. Afterwards, the company will maintain a constant 5% dividend growth rate forever. If the required return on the stock is 11%, what is the current stock value?


B. YYY Corp. just paid a $2.50 dividend and its dividends are expected to grow at 25% rate for the next three years, then at a constant rate of 6% thereafter forever. If investors require 13% return on this stock, what is the current stock value?


8. Daniela Company has the following historical information:


Year 1

Year 2

Year 3

Year 4

Stock price

$ 49.50

$ 58.12

$ 67.34

$ 60.25

EPS

2.40

2.58

2.71

2.85

Earnings growth rate

11%


Using the company's average PE as a benchmark, estimate the target stock price in one year.


Studypool has helped 1,244,100 students
flag Report DMCA
Similar Questions
Hot Questions
Related Tags
Study Guides

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors